athenahealth Inc. (NASDAQ: ATHN )
are in the red after opening the session up without any news from
the physician business services company. Options action during
morning trading suggests one investor expects the downside to
continue for at least one month longer.
At 9:59 a.m. EDT, a block of roughly 5,000 August-September 22.5
put spreads changed hands as part of a bearish put roll. Current
open interest in the August and September puts is 6,200 contracts
and 420 contracts, respectively. The front-month options traded for
20 cents per contract, which was closer to the bid price at the
time of the trade, while the September 22.5 puts crossed the tape
for $1 per contract (closer to the ask price when the volume hit
the tape). This options action suggests the investor sold to close
the August 22.5 puts and bought to open the September 22.5 puts to
bet that the stock has more room to drop during the near term. The
investor paid a net debit of 80 cents to place this bearish
This put roll will make money if the stock is trading below
$21.70 at September options expiration. This trade could turn
significant profits if the stock drops another 16%. If the stock is
trading at zero at September expiration, the investor could collect
a maximum profit of $21.70 per contract. It looks like the investor
is willing to commit a hefty amount of capital (roughly $400,000 in
total) to bet on further downside.
ATHN shares were trading down roughly 40 cents to $25.82 as of
10:22 a.m. EDT. The stock is trading roughly 17% higher than its'
recent low of $22. The company did not announce any news today, but
announced earnings figures of 12 cents per share on July 22. The
company beat estimates by two cents.